Why Is a Currency Option Sometimes Preferred to a Forward

question 33

Multiple Choice

Why is a currency option sometimes preferred to a forward market hedge?

• A)It is an optional contract,so that the company could not exercise it and be able to benefit from upside swings in the foreign currency value.
• B)The rates are cheaper.
• C)They are available for longer periods.
• D)The IRS favors them for tax credits when they are exercised.

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